School Finance 101
How are schools funded?
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Our primary source of funding comes from the State of Minnesota. The legislature decides the state's K-12 basic funding levels, as well as directing what services schools must provide. In determining how much funding we receive, the legislature uses a complex formula that considers the number of students, special needs within our district, property wealth and several other factors. For our school district, the state currently funds 76 percent of our budget.
Elementary and secondary education in Minnesota is financed through a combination of state-collected taxes (primarily income and sales taxes) and locally collected property taxes.
Revenue for school districts is received in these major categories:
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General Education Aid
The largest share of the education finance appropriation, general education aid, is intended to provide the basic financial support for the education program.
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Categorical Aids
Categorical revenue formulas are generally used to meet costs that vary significantly between school districts (i.e., special education) or promote certain types of programs (i.e. integration, adult basic education).
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State Paid Property Tax Credits
Property tax credits reduce the amount of property taxes paid. To make up for this reduction, the state pays the difference between what was levied in property taxes and what is actually received in property taxes to school districts and other taxing districts.
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Property Tax Levies
Property tax levies are usually determined as part of a formula that includes state aid. The largest share of the levy is from voter-approved levies, the excess operating referendum and debt service levies.
General education funds pay for operating expenses, including salaries, benefits and supplies. Funds are also distributed to schools and sites. When there is not enough funding within the budget, the School Board may ask voters to approve an operating referendum levy.
School Funding Related Terms & Definitions
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Average Daily Membership (ADM)
Average Daily Membership (ADM) refers to the average number of students enrolled within a school or district each day over a specific time period.
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Operating Capital Allocations
Money set aside specifically for physical equipment and supplies that typically costs $500 or greater and/or last longer than 3 years such as desks, chairs, cafeteria tables, course-specific machinery, video production equipment, kilns, microscopes, musical instruments, sewing machines, stoves, refrigerators, iPads and other technology. Additional uses of operating capital dollars can be found in MN Statute 126C.10 Subd. 14 Uses of Total Operating Capital Revenue.
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Full Time Equivalent (FTE)
Full Time Equivalent (FTE) refers to the unit of measurement equivalent to a worker or student, one unit of a work or school day, applicable in a variety of contexts. In most cases, full time equivalents measure an employee or student and/or their workload; however, 1 FTE does not necessarily equate to 1 person, as some employees work part-time (less than 1 FTE).
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Cross Subsidy
A cross subsidy measures the difference between expenditures and corresponding revenues. Put more simply, it is money from the District's General Fund Budget that is needed to cover underfunded Federal and State mandates.
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Multilingual Learner (ML)
Multilingual learners are those who comes from a multilingual home. They may have learned another language first, or have consistent interactions in another language currently. Some of these students require direct, specialized instruction in academic English. This can be done in a content class trough co-teaching, or in a pull-out small group environment.
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Assigned Fund Balance
Represents amounts constrained by the school district’s intent to be used for a specific purpose. Intent is expressed by the school board itself, or a body or an official to which the school board has delegated the authority to assign amounts to be used for a specific purpose.